Five Things You Need to Know to Start Your Day
It’s decision day at the Fed, there’s election anxiety in markets, and tech earnings are due. Here are some of the things people in markets are talking about today.
At 2 p.m. ET the Federal Reserve will announce its latest monetary policy decision and while chances of an interest hike today are very low, they are not zero. Still, even as policy makers insist every meeting is ‘live’ markets are only putting a 15 percent chance on an increase in rates today. A number of factors, from good-but-not-excellent jobs data to growing political risk, seem to have weighed on market participants’ minds and led them to discount an increase this month. There is no press conference scheduled after today’s decision.
With polls tightening less than a week ahead of the U.S. presidential election, uncertainty over the outcome is upsetting markets. In currencies, the Mexican peso is selling off as Trump closes in on Clinton’s lead, while the Swiss franc is surging as investors scramble for safe havens. Gold is also rising, up for the fifth straight day and heading towards $1,300 an ounce. In U.S. Treasuries, two of the biggest debt investors say they’re expecting yields on the benchmark 10-year to reach about 2 percent before falling back as the bond rout nears an end.
Oil slide continues
A barrel of West Texas Intermediate dropped below $46 a barrel this morning, and was trading at $45.96 as of 6:09 a.m. ET. The drop in crude prices and the structure of Brent futures means that oil traders can once again take advantage of contango — where oil for delivery today is cheaper than oil in future months — by storing oil in tankers at sea. In other news, gasoline futures pared yesterday’s rally after Colonial Pipeline Co. said that the biggest U.S. fuel pipeline would be repaired by noon on Saturday.
Overnight, the MSCI Asia Pacific Index fell 1.1 percent and Japan’s Topix index dropped 1.8 percent as the yen climbed against the U.S. dollar for a second day. In Europe, the Stoxx 600 Index was 0.6 percent lower at 6:17 a.m. ET, off the lows of the day as positive euro-area manufacturing data eased pressure on equities. S&P 500 futures were down 0.3 percent.
Alibaba Group Holding Ltd. and Facebook Inc. are due to report earnings today. With Alibaba’s e-commerce division plateauing, investors will be looking to the company’s cloud computing division for signs of growth. Facebook will report after the bell, and investors will be looking at user growth and revenue growth from mobile.